Manuel’s recession optimism not shared by all

Economists and readers alike
are slightly less optimistic than
South African Finance Minister
Trevor Manuel when it comes
to talk of a recession in the
country.
“Can we avoid recession?
I am still pretty confident we
can,” said Manuel ahead of
his departure to the World
Economic Forum in Switzerland
earlier this month.
While he warned it would
not all be sunshine and roses,
Manuel said South Africa would
in all probability continue to see
its economy grow despite the
global economic fiasco.
“A recession is popularly
defined as two quarters of
decline and while it is possible
that South Africa may avoid a
recession, it is not likely that
we will,” said Nedbank senior
economist Dennis Dykes. “We
are slightly less optimistic than
the minister because we are sure
to see more growth slowdown
and if we do manage to avoid
a recession we will have done
well.”
With the World Economic
Forum under way in
Switzerland, the impact of the
sinking world economies has
come to the forefront, with
many international economists
saying the impact is expected to
be much worse than predicted.
This is the view of Dykes
who told FTW that much of
South Africa’s economic future
depended on how we reacted to
world markets. “At this stage it
is all about how deep and how
long it is going to be and how
we stand up to that. Of course
the infrastructure spend ahead
of 2010 in the country is very
good as well as the spending
on transport and electricity
infrastructures, but there are
sectors that are already feeling
the pinch and are set to be
affected even more.”
This, he said, included the
mining, manufacturing and
motor vehicle sectors. “The
other sectors are going to have
a tough battle on their hands
to make up the deficit. Much
is also dependent on consumer
spending which is expected to
pick up with the petrol price
decreasing and the interest rate
coming down later in the year.”
While readers agreed South
Africa would manage the
global economic crisis better
than most countries, they were
less sanguine.
One of our readers
commented that the country
would manage better than most
in the economic climate if
Manuel got the auditor general’s
office up and running efficiently
and then enforced
the findings of the auditor
general and ensured that the
relevant government people
were held responsible for any
irregularities found, and dealt
with them accordingly.